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Remittance numbers for February 2019 are out. If you are looking whether Pakistan is on track to meet the full year target of $20-21 billion, you would not be disappointed. If you are one for month-on-month numbers, you could start to worry a bit. Since that 38 percent year-on-year growth in October 2018 (read: Remittance revival,published Nov 12, 2018), month-on-month has been rather subdued, declining 10 percent in February 2019.

On the basis of 8MFY19 numbers, the 11.8 percent year-on-year growth is indicative that barring exceptional circumstances, remittance growth would manage to stay in double digits by the end of FY19. The 8M remittance numbers have reflected, on an average, around two-third of annual remittances, in the last seven years. Taking 65 percent target achieved in 8MFY19, the year end number could be slightly north of $22 billion – reflecting a year-on-year growth of 12.5 percent.

In terms of growth, Pakistan has been increasingly looking to the West, as the USA and UK now lead the ship, with a contribution of 35 and 27 percent respectively, to the overall growth. Other meaningful growth comes from Malaysia with a contribution of 21 percent, making up for more than four-fifth of the overall growth. Meanwhile, Saudi Arabia, with the largest share in total remittances at 23 percent, contributed only 5 percent to the overall growth. The remittance pie in terms of countrywide share has also started to wear a different look from as recent as just two years ago. Saudi share in total remittances back in FY17 was 29 percent, more than the combined share of both the US and UK at 24 percent. The share of US and UK now stands at a combined 31 percent and growing, versus that of 23 percent from Saudi Arabia.

The jury is out on what is behind the high growth from the West and a muted one from the Middle East, especially Saudi Arabia. The central bank had earlier singled out the ‘increased economic activity’ in the Western world as a possible reason for high growth from that region. Some have even gone on to the extent of linking the increased Western flow to the PM’s charm.

Whatever little is almost surely known that both quality and quantity of labour exports to Saudi Arabia in particular, and Middle East in general has visibly declined over the years (read: Remittances: good news and bad, published Feb 13, 2019). It would be unfair not to give the marketing efforts of the PRI and cracking down efforts of the government on hundi/hawala channels – the due share.

For now, the remittance may well be the only major indicator that the government can have any realistic hopes of meeting the target. A downside that may well be hidden due to the impact of increased remittance flow via official channels is the rupee depreciation. The currency has depreciated sharply over the past few months, without causing a dent to the overall growth. Once the juice is extracted from formalizing the remittance channels, the currency depreciation impact may start becoming more visible